[Federal Register Volume 78, Number 95 (Thursday, May 16, 2013)]
[Proposed Rules]
[Pages 28790-28793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-11402]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

48 CFR Part 215

RIN 0750-AH86


Defense Federal Acquisition Regulation Supplement; Forward 
Pricing Rate Proposal Adequacy Checklist (DFARS Case 2012-D035)

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Proposed rule.

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SUMMARY: DoD is proposing to amend the Defense Federal Acquisition 
Regulation Supplement (DFARS) to provide guidance to contractors for 
the submittal of forward pricing rate proposals to ensure the adequacy 
of forward pricing rate proposals submitted to the Government.

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before July 15, 2013, to be considered in 
the formation of the final rule.

ADDRESSES: Submit comments, identified by DFARS Case 2012-D035, using 
any of the following methods:
    Regulations.gov: http://www.regulations.gov. Submit comments via 
the Federal eRulemaking portal by inserting ``DFARS Case 2012-D035'' 
under the heading ``Enter keyword or ID'' and selecting ``Search.'' 
Select the link ``Submit a Comment'' that corresponds with ``DFARS Case 
2012-D035.'' Follow the instructions provided at the ``Submit a 
Comment'' screen. Please include your name, company name (if any), and 
``DFARS Case 2012-D035'' on your attached document. Follow the 
instructions for submitting comments.
    Email: [email protected]. Include DFARS Case 2012-D035 in the subject 
line of the message.
    Fax: 571-372-6094.
    Mail: Defense Acquisition Regulations System, Attn: Mr. Mark 
Gomersall, OUSD(AT&L)DPAP(DARS), Room 3B855, 3060 Defense Pentagon, 
Washington, DC 20301-3060.
    Comments received generally will be posted without change to http://www.regulations.gov, including any personal information provided. To 
confirm receipt of your comment(s), please check www.regulations.gov 
approximately two to three days after submission to verify posting 
(except allow 30 days for posting of comments submitted by mail).

FOR FURTHER INFORMATION CONTACT: Mr. Mark Gomersall, 571-372-6099.

SUPPLEMENTARY INFORMATION:

I. Background

    DoD is proposing to revise the DFARS at 215.403-5 by adding 
instructions to contracting officers to request contractors to submit 
the proposed forward pricing rate proposal adequacy checklist at Table 
215-XX with forward pricing rate proposals. This proposed rule provides 
guidance to contractors for the submittal of forward pricing rate 
proposals by requesting that contractors submit a proposed forward 
pricing rate proposal adequacy checklist with their forward pricing 
rate proposals to ensure submission of thorough, accurate, and complete 
proposals.

II. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

III. Regulatory Flexibility Act

    DoD does not expect this proposed rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
However, an initial regulatory flexibility analysis has been performed 
and is summarized as follows:
    This rule amends the DFARS at 215.403-5 by adding instructions to 
contracting officers to request contractors to submit the proposed 
forward pricing rate proposal adequacy checklist with forward pricing 
rate proposals. The objective is to provide guidance to contractors for 
the submittal of forward pricing rate proposals.
    DoD does not expect this proposed rule to have a significant 
economic impact on a substantial number of small because it only a 
small percentage of Government contractors are requested to submit a 
forward pricing rate proposal, as set forth at FAR 42.1701(a). The 
Government will ask only those contractors with a significant volume of 
Government contracts to submit such proposals.
    The proposed rule does not duplicate, overlap, or conflict with any 
other Federal rules.

IV. Paperwork Reduction Act

    The rule contains information collection requirements that require 
the approval of the Office of Management and Budget under the Paperwork 
Reduction Act (44 U.S.C. chapter 35). Accordingly, DoD has submitted a 
request for approval of a new information collection requirement 
concerning Defense Federal Acquisition Regulation Supplement; Forward 
Pricing Rate Proposal Adequacy Checklist (DFARS Case 2012-D035) to the 
Office of Management and Budget.
    A. Public reporting burden for this collection of information is 
estimated to average 4 hours per response, including the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    The annual reporting burden estimated as follows:
    Respondents: 160.
    Responses per respondent: 1.
    Total annual responses: 160.
    Preparation hours per response: 4 hours
    Total response Burden Hours: 640 hours.
    B. Request for Comments Regarding Paperwork Burden.
    Written comments and recommendations on the proposed information 
collection, including suggestions for reducing this burden, should be 
sent to Ms. Jasmeet Seehra at the Office of Management and Budget, Desk 
Officer for DoD, Room 10236, New Executive Office Building, Washington,

[[Page 28791]]

DC 20503, or email [email protected], with a copy to the 
Defense Acquisition Regulations System, Attn: Mark Gomersall, 
OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 Defense Pentagon, Washington, DC 
20301-3060. Comments can be received from 30 to 60 days after the date 
of this notice, but comments to OMB will be most useful if received by 
OMB within 30 days after the date of this notice.
    Public comments are particularly invited on: whether this 
collection of information is necessary for the proper performance of 
functions of the DFARS, and will have practical utility; whether our 
estimate of the public burden of this collection of information is 
accurate, and based on valid assumptions and methodology; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and ways in which we can minimize the burden of the 
collection of information on those who are to respond, through the use 
of appropriate technological collection techniques or other forms of 
information technology.
    To request more information on this proposed information collection 
or to obtain a copy of the proposal and associated collection 
instruments, please write to the Defense Acquisition Regulations 
System, Attn: Mark Gomersall, OUSD(AT&L)DPAP/DARS, Room 3B855, 3060 
Defense Pentagon, Washington, DC 20301-3060, or email [email protected]. 
Include DFARS Case 2012-D035 in the subject line of the message.

List of Subjects in 48 CFR Part 215

    Government procurement.

Manuel Quinones,
Editor, Defense Acquisition Regulations System.
    Therefore, DoD proposes to amend 48 CFR part 215 as follows:

PART 215--CONTRACTING BY NEGOTIATION

0
1. The authority citation for part 215 continues to read as follows:

    Authority: 41 U.S.C. 1303 and 48 CFR chapter 1.

0
2. Add 215.403-5 to read as follows:


215.403-5  Instructions for submissions of certified cost or pricing 
data or data other than cost or pricing data pursuant to the procedures 
in FAR 42.1701(b).

    (b)(3) For contractors following the commercial contract cost 
principles in FAR 31.2, if the contracting officer determines that a 
forward pricing rate proposal should be obtained pursuant to FAR 
42.1701, the contracting officer shall require that the forward pricing 
rate proposals comply with FAR 15.408, Table 15-2, and DFARS 252.215-
7002. The contracting officer should request that the proposal be 
submitted to the Government at least 90 days prior to the 
implementation date for the proposed rates. To ensure the proposal is 
complete, the contracting officer shall request the contractor complete 
the contractor forward pricing rate proposal adequacy checklist at 
Table 215-XX, and submit it with the forward pricing rate proposal.

Table 215-XX--Contractor Forward Pricing Rate Proposal Adequacy 
Checklist

    The contractor should complete the following checklist, providing 
location of requested information, or an explanation of why the 
requested information is absent.

                           Contractor Forward Pricing Rate Proposal Adequacy Checklist
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                                                                   Proposal page      If not provided  EXPLAIN
           References                    Submission item                No.         (may use continuation pages)
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                                              GENERAL INSTRUCTIONS
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1. FAR 15.408, Table 15-2,        Is there a properly completed
 Section I.A.                      first page of the proposal
                                   or a summary format as
                                   specified by the contracting
                                   officer?
2. FAR 15.407-1 and FAR 15.408,   Does the proposal disclose
 Table 15-2, Section I.A.(8).      known or anticipated changes
                                   in business activities or
                                   processes that could
                                   materially impact the costs
                                   (if not previously
                                   provided)? For example:
                                     a. Management initiatives
                                      to reduce costs;
                                     Changes in management
                                      objectives as a result of
                                      economic conditions and
                                      increased
                                      competitiveness;
                                     c. Changes in accounting
                                      policies, procedures, and
                                      practices including:
                                     (i) reclassification of
                                      expenses from direct to
                                      indirect or vice versa;
                                      (ii) new methods of
                                      accumulating and
                                      allocating indirect costs
                                      and the related impact
                                      and
                                     (iii) advance agreements;
                                     d. Company reorganizations
                                      (including acquisitions
                                      or divestitures);
                                     e. Shutdown of facilities;
                                     f. Changes in business
                                      volume and/or contract
                                      mix/type.
3. FAR 15.408, Table 15-2,        Does the proposal include a
 Section I.B.                      table of contents (index)
                                   identifying and referencing
                                   all supporting data
                                   accompanying or identified
                                   in the proposal?
4. DFARS 252.215-7002(d)(4)(iv).  For supporting documentation
                                   not provided with the
                                   proposal, does the basis of
                                   estimate in the proposal
                                   include the location of the
                                   documentation and the point
                                   of contact (custodian) name,
                                   phone number, and email
                                   address?

[[Page 28792]]

 
5. FAR 15.408, Table 15-2,        Is the proposal
 Section I.C.(2)(i).               mathematically correct and
                                   does it reconcile to the
                                   supporting data referenced?
6. FAR 15.408, Table 15-2,        Do proposed costs based on
 Section I.C.(2)(i) and DFARS      judgmental factors include
 252.215-7002(d)(4)(iv).           an explanation of the
                                   estimating processes and
                                   methods used; including
                                   those used in projecting
                                   from known data?
7. FAR 15.408, Table 15-2,        Is the proposal internally
 Section I.D.                      consistent (for example, is
                                   the direct labor base used
                                   for labor overhead
                                   consistent with direct labor
                                   in the G&A allocation base)?
8. FAR 15.408, Table 15-2.        Does the proposal show trends
 Section II.C. and DFARS 252.215-  and budgetary data? Is an
 7002(d)(4)(iv).                   explanation of how the data
                                   was used provided, including
                                   any adjustments to the data?
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                                                  Direct Labor
----------------------------------------------------------------------------------------------------------------
9. FAR 15.408, Table 15-2,        Does the proposal include an
 Section II.B.                     explanation of the
                                   methodology used to develop
                                   the direct labor rates and
                                   identify the basis of
                                   estimate?
10. DFARS 252.215(d)(4)(iv).....  Does the proposal include or
                                   identify the location of the
                                   supporting documents for the
                                   base-year labor rates (e.g.,
                                   payroll records)?
11. FAR 15.408 Table 15-2,        Does the proposal identify
 Section I.C(2)(i); DFARS          escalation factors for the
 252.215-7002(d)(4)(iv).           out years, the costs to
                                   which escalation is
                                   applicable, and the basis of
                                   the factors used?
12. FAR 15.407-1................  Does the proposal identify
                                   planned or anticipated
                                   changes in the composition
                                   of labor rates, labor
                                   categories, union
                                   agreements, headcounts, or
                                   other factors that could
                                   significantly impact the
                                   direct labor rates?
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                                  Indirect Rates (Fringe, Overhead, G&A, etc.)
----------------------------------------------------------------------------------------------------------------
13. FAR 15.408, Table 15-2,       Does the proposal identify
 Section II.C.                     the basis of estimate and
                                   provide an explanation of
                                   the methodology used to
                                   develop the indirect rates?
14. FAR 15.408, Table 15-2,       Does the proposal include or
 Section I.B.                      identify the location of the
                                   supporting documents for the
                                   proposed rates?
15. FAR 15.408 Table 15-2,        Does the proposal identify
 Section I.D.                      indirect expenses by burden
                                   center, by cost element, by
                                   year (including any
                                   voluntary deletions, if
                                   applicable) in a format that
                                   is consistent with the
                                   accounting system used to
                                   accumulate actual expenses?
16. FAR 15.408, Table 15-2,       Does the proposal identify
 Section I.C.(2)(ii).              any contingencies?
17. FAR 15.407-1................  Does the proposal identify
                                   planned or anticipated
                                   changes in the nature, type
                                   or level of indirect costs,
                                   including fringe benefits?
18. DFARS 252.215-7002(d)(4)(iv)  Does the proposal identify
                                   corporate, home office,
                                   shared services, or other
                                   incoming allocated costs and
                                   the source for those costs,
                                   including location and point
                                   of contact (custodian) name,
                                   phone number, and email
                                   address?
19. FAR 15.408 Table 15-2,        Does the proposal separately
 Section II.C.; DFARS 252.215-     identify all intermediate
 7002(d)(4)(iv).                   cost pools and provide a
                                   reconciliation to show where
                                   the costs were allocated?
20. FAR 15.408 Table 15-2,        Does the proposal identify
 Section I.C(2)(i); DFARS          the escalation factors for
 252.215-7002(d)(4)(iv).           the out years, the costs to
                                   which escalation is
                                   applicable, and the basis of
                                   the factors used?
21.DFARS 252.215-7002(d)(4)(iv).  Does the proposal provide
                                   appropriate details of the
                                   development of the
                                   allocation base?
22. FAR 15.408 Table 15-2,        Does the proposal include or
 Section I.B., DFARS 252.215-      reference the supporting
 7002(d)(4)(xi).                   data for the allocation base
                                   such as program budgets,
                                   negotiation memorandums,
                                   proposals, contract values,
                                   etc.?
23. DFARS 252.215-7002(d)(4)(xi)  Does the proposal identify
                                   how the proposed allocation
                                   base reconciles with its
                                   long range plans, strategic
                                   plan, operating budgets,
                                   sales forecasts, program
                                   budgets, etc.?
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[[Page 28793]]

 
                                               Cost of Money (COM)
----------------------------------------------------------------------------------------------------------------
24. FAR 15.408, Table 15-2,       Are Cost of Money rates
 Section II.F.                     submitted on Form CASB-CMF,
                                   with the Treasury Rate used
                                   to compute COM identified
                                   and a summary of the net
                                   book value of assets,
                                   identified as distributed &
                                   non-distributed?
25. DFARS 252.215-7002(d)(4)(iv)  Does the proposal identify
                                   the support for the Form
                                   CASB-CMF, for example, the
                                   underlying reports and
                                   records supporting the net
                                   book value of assets
                                   contained in the form?
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                                                      OTHER
----------------------------------------------------------------------------------------------------------------
26. DFARS 252.215-                Does the proposal include a
 7002(d)(4)(xiii).                 comparison of prior
                                   forecasted costs to actual
                                   results in the same format
                                   as the proposal and an
                                   explanation/analysis of any
                                   differences?
27. DFARS 252.215-                If this is a revision to a
 7002(d)(4)(xiv).                  previous rate proposal or an
                                   FPRA, does the new proposal
                                   provide a summary of the
                                   changes in the circumstances
                                   or the facts that the
                                   contractor asserts require
                                   the change to the rates?
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[FR Doc. 2013-11402 Filed 5-15-13; 8:45 am]
BILLING CODE 5001-06-P